Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Product mix strategies, Product mix strategies: A  company has severa...

Product mix strategies: A  company has several major strategic at its disposal, with respect to the width, depth and consistency of its product mix. One major management aspe

Explain the marketing communications mix, Explain the Marketing Communicati...

Explain the Marketing Communications Mix Marketing communications mix comprises a set of tools (disciplines) which can be used in various combinations and different degrees of

Discuss the benefits buyers get from the use of e-commerce, Question 1: ...

Question 1: (a) Define the following terms: (i) e-commerce (ii) e- business and (iii) e-marketing (b) Discuss the benefits that: i. buyers get from the use of e-c

Corporate identity in marketing, Question (a) ‘'Corporate identity has...

Question (a) ‘'Corporate identity has become a universal technique for promoting companies and improving corporate culture. ‘' Explain what you understand by: (i) Corporat

Explain with examples the meaning of shadow branding, Question: (a) Ex...

Question: (a) Explain with examples the meaning of shadow branding? (b) What is the difference between umbrella branding and portfolio branding? (c) List the six market

Co-branding, what is meant by line extension of a product?

what is meant by line extension of a product?

Market segmentation, Q.   Explain market segmentation?  Tell need to segme...

Q.   Explain market segmentation?  Tell need to segment the markets? O R Clarify th e term market segmentation & briefly explain the need to segment the market? A

Assertive confrontation message to an employee, Question (a) When deli...

Question (a) When delivering an assertive confrontation message to an employee, you have to be careful not to become defensive or reactive if the employee becomes argumentati

What are the differences between goods and services, Many service sector bu...

Many service sector businesses fail because their marketing managers do not have any experience in the marketing of services. They often have been previously involved in the mark

How they are manipulated to achieve competitive edge, Question 1: McCar...

Question 1: McCarthy (1960) formulated the concept of 4Ps- Product, Promotion, Price and Place marketing mix. For several years these were the principal foundation on which

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd